By Ketki Saxena
Investing.com – Nordstrom Inc (NYSE:JWN). has announced that it will close all of its Canadian stores and cut 2,500 jobs in order to wind down operations in Canada.
The Seattle-based retailer has six Nordstrom and seven Nordstrom Rack stores across the country which will be shuttered by late June, as well as their e-commerce business nordstrom.ca which ceased operations on Thursday.
Chief executive Erik Nordstrom said these closures were a result of regular reviews conducted by the company, and challenges encountered in the company’s plan “to build and sustain a long-term business” in Canada.
Nordstrom noted, “Despite our best efforts, we do not see a realistic path to profitability for the Canadian business."
The upscale department store chain first announced its expansion into Canada back in 2012 with its debut at CF Chinook Centre Calgary followed quickly after by locations at Ottawa's CF Rideau Centre; Vancouver's CF Pacific Centre; Toronto'sCF Eaton (NYSE:ETN) Centre, Yorkdale Shopping Center and Sherway Gardens Mall.
Nordstrom opened several other locations across the country with its Rack Store, offering luxury brands up to 70% off retail prices from 38 to 50 brands already sold through Canadian Department Stores.
Neil Saunders managing director of GlobalData Retail Research Agency believes this closure was an admission failure for Nordstom who could no longer support losses incurred within Canadain market.
"Although the division is relatively small, and the Canadian market has somewhat limited potential because of its size, it is nevertheless a significant admission of failure that Nordstrom cannot make its proposition work financially," he wrote in a note to investors.
"It also underlines the rather tenuous position of the company which wants to focus is finances and firepower on reinvigorating the U.S. operation."
The company is seeking approval from the Ontario Superior Court Justice Companies Creditors Arrangement Act for a liquidation sale, expected to begin soon after the order is granted.
The wind-down is expected to result in a roughly US$400 million decline in net sales.